A welfare-based approach to aggregating growth rates across countries /

Author :

Son, Hyun H.;Hasan, Rana

Published :

Manila : Asian Development Bank, 2011.

Subject :

(ADB) Asian Development Bank
Economic development

Organization :

Asian Development Bank

Description :

This paper introduces a new methodology in aggregating per capita growth rates that does not suffer from the drawbacks of the conventional approach. Using a welfare-based approach, it is shown that the proposed methodology is robust with respect to exchange rates and generates weights that always add up to unity, thus avoiding the anomalies that are inherent in the conventional approach. The methodology proposed in the paper is applied to calculate aggregate growth rates of 33 developing member countries as well as five regional groupings, and the results are compared with those arising from the conventional approach. A number of insights arise that were previously hidden or inaccessible.